RBI’s Sankar rules out role of stablecoins in India’s financial system
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The RBI official dismissed the benefits claimed by stablecoin proponents, noting that India’s existing payment infrastructure already provides efficient solutions.
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REUTERS/Dado Ruvic
Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar declared that stablecoins do not meet fundamental monetary criteria and threaten economic stability, signaling exclusion from India’s financial ecosystem.
During his address at the Mint Annual BFSI Conclave 2025 in Mumbai, Sankar emphasized: “Stablecoins fulfill neither fiat currency attributes nor monetary uniformity. Their proliferation could introduce hundreds of parallel currencies, creating systemic instability.”
He countered arguments favoring stablecoins by highlighting India’s existing efficient digital payment networks. “Systems like UPI already deliver rapid, cost-effective transactions. Stablecoins offer no proven advantages in speed, cost, or reliability within our domestic framework,” the Deputy Governor stated.
Sankar outlined several systemic dangers, warning: “Widespread stablecoin usage could erode central banks’ monetary policy effectiveness and accelerate dollarization in emerging economies.
Credit conundrum
The banking sector faces direct disruption from potential stablecoin adoption. “If stablecoins replace traditional deposits, banks would lose their intermediation role,” Sankar explained. “This could either increase borrowing costs or force banks to depend solely on central bank liquidity for funding credit operations.”
He additionally highlighted fiscal impacts: “Seigniorage revenue – generated through sovereign currency issuance – would transfer to private foreign entities if stablecoins dominate transactions.”
Sankar positioned Central Bank Digital Currencies (CBDCs) as the optimal solution: “CBDCs mirror stablecoins’ digital advantages while fulfilling all monetary requirements: fiat status, uniformity, trust, and value representation – without introducing equivalent risks.”
The Deputy Governor outlined India’s strategic priorities: maintaining currency trust, protecting monetary sovereignty, fostering CBDC-led innovation, and ensuring financial system reinforcement through regulation.
“Stablecoins appear functionally redundant when fiat currency systems can achieve superior results,” Sankar concluded.
Published on December 12, 2025
